Written by Robert Lenzner, Forbes
In my search for the truth about how much ObamaCare will increase the cost of health care insurance, I came upon a frightening map of the United States that projected what the percentage hikes would be state by state for people with individual coverage. The projections, prepared by the Society of Actuaries in March 2013 predicted some pretty outrageous total health care increases for people with individual coverage in the likes of California (62%), Alabama (60%), Texas (34%) and Arizona (41%). Only in New York, Massachusetts and New Jersey would the premiums decline slightly for people with individual coverage, a segment of the market that is expected to increase from 11.9 million people at present to 25.6 million as more Americans sign up for insurance coverage under ObamaCare.
The Society of Actuaries contacted me this morning to explain that the large percent increases are the projected estimate for “underlying claims costs… not the expected premium. So, I was incorrect in pinning the 32% just on the rise in the cost of buying health insurance, but rather it refers to the projected average increase in the insurance claims to be paid by the health insurance companies.
Maybe the computer models used by the Society of Actuaries are just plumb ridiculous and wrong. I printed out the actuarial study entitled “Cost of the Future Newly Insured Under the Affordable Care Act (ACA)” and I learned that the Actuaries predict ACA-driven changes in individual market composition of the individual healthcare market could drive up underlying claims costs by an average of 32% nationally by 2017.” Moreover the projections showed double-digit increase in 42 of 50 states over the next four years.
These projected increases, which you won’t hear the White House mentioning, are due to “the fact that premiums are driven primarily by the underlying cost of medical care and not health plans administrative costs and profits.” In general, the states expected to have large jumps in the premium now have “low current individual costs and those having high current individual costs” will show decreases.
See how murky and complicated this all is? No wonder there is widespread dissension about the new plan, because, let’s face it, the Obama White House never truly prepared the population for the gritty truth. My housekeeper told me this week she had just received a letter from her insurer canceling her policy and raising her premium far more than she could ever have dreamed.
This shock to the pocketbook of the working class individual could not be a worse outcome for ObamaCare. These dunning letters, together with the easier to understand cuts in food stamps that are coming, sabotage what Obama set out to do in restoring the economy. The individual holder of health insurance and the uninsured individual, who were supposed to be the Americans most in need, face a discouraging prospect. Apparently, if they are NOT in a group insurance plan where the cost is spread among many, they are getting hurt by ObamaCare.
I can only conclude that the unexpected ramification of ObamaCare is that some tens of millions may find ObamaCare unaffordable rather than affordable. At least, that’s how it looks, short of getting more enlightened about the prospects. I can tell you this: a leading Senator who was opposed to the Obama-designed health bill came to see me in late 2009 to disclose that he had just been to the White House to tell the President he could NOT vote for this bill. This Senator wanted the bill rewritten in committee, otherwise he was going to vote against it. It was, he told me, a blatant sell-out to the giant health insurance companies. (See my Forbes piece Only the Health Insurance Giants and Their Shareholders Profited from ObamaCare)
Obama told the Senator his administration needed a legislative victory badly, and he did not want to wait to rewrite the bill. So, the health insurance giants, Aetna AET +1.74%, Cigna CI +1.05%, United Health Group, and Wellpoint raised their premiums over the past four years without any interference, and one upshot is that many individuals face the probability of much more costly health insurance. Under the Affordable Care Act, the higher costs will be balanced off by the benefit resulting from the mandatory policy for 80% of the premiums to be spent on their medical treatments. We are in flux about the cost of health care.